Arbitration, Gateway Issues: SCOTUS Holds That When Parties Agree Arbitrator Will Resolve Arbitrability Question, There Is No "Wholly Groundless" Exception Allowing Question To Be Decided By Court

First SCOTUS Opinion Authored By Justice Kavanaugh Is Unanimous.

    "Under the Federal Arbitration Act, parties to a contract may agree that an arbitrator rather than a court will resolve disputes arising out of the contract." The question presented in Henry Schein, Inc., et al. v. Archer and White Sales, Inc., No. 17-1272 (S. Ct. 1/8/19), is whether courts can decide arbitrability if the basis for arbitration is "wholly groundless", and whether such an exception to delegation of the decision to the arbitrator is consistent with the Federal Arbitration Act. In the first opinion authored by Justice Kavanaugh, the Court unanimously holds that a "wholly groundless" exception is inconsistent with the FAA. 

    COMMENT: The Justices "express no view about whether the contract at issue in this case in fact delegated the arbitrability issue to an arbitrator." So the judgment of the Court of Appeals is vacated and remanded, and the Court of Appeals may address the delegation issue. 

    In some instances, where the gateway decision of arbitrability is delegated to the arbitrator, the basis for delegation is "wholly groundless", and the arbitrator reaches the wrong conclusion, the arbitrator may exceed the arbitrator's powers, leading to "back-end" judicial review, and a waste of time. But SCOTUS is not going to rewrite the FAA.